First home buyers in Australia – the time is now

First home buyers in Australia – the time is now

APRA recently relaxed restrictions around how lenders review the capacity of borrowers to repay their loans. This change is on the back of the Reserve Bank of Australia (RBA) cutting interests rates to a record low of 1%.

This, and other exciting new changes, has made the Aussie property market far more accessible to first home buyers. Here’s what you need to know.

The new rules

The previous industry standard imposed by APRA meant lenders assessed the capacity of borrowers according to a minimum interest rate of 7%. Now, APRA says lenders can set their own minimum rate – drawing on a recommended buffer of 2.5% when making calculations.

What does this mean for borrowers?

It means that a borrower who applies for a 3% mortgage rate is more likely to secure a larger loan. Why? Instead of being assessed at 7%, they can expect to be assessed at around 5.5%.

A first home buyer seeking an average mortgage of $347,313* should be able to borrow thousands more under these new rules. As a result, we are likely to see more first home buyers getting their foot in the market. 

Good news for first home buyers in Australia 

On 1 January 2020, a new First Home Loan Deposit Scheme kicks into gear, thanks to the Federal Government. The scheme provides guarantees to approximately 10% of Australians who purchased their first property in 2018.

Couples who earn up to $200,000 and single people who earn up to $125,000 are eligible, if they saved 5% of the total value of their property.

A statement on the Liberal party website said. 

“Australians are buying a house later in life and first home buyers are having to save a bigger deposit than their parents did. When you work hard, save and invest for the future, the Morrison Government believes you should be supported.”

No matter what your politics may be, this is good news for first home buyers.

Buying your first home?

Talk to us about securing a home loan that matches your goals and your budget. We research and tailor a loan based on your unique circumstances, and we work with you over the long term to ensure you’re taken care of.

Get started now.

* According to May 2019 ABS data.
Financial Advice Disclaimer: This information is general in nature. Mortgage brokers do not provide financial advice. Clients seeking financial advice will be referred to a qualified financial planner.